Business Digest

BUSINESS DIGEST

Magellan Health Services Inc. said yesterday that two of its directors, G. Fred DiBona Jr. and A.D. Frazier Jr., have resigned from the board, noting the demands of other commitments.

The Columbia behavioral managed-care company said it is seeking new directors.

Magellan covers about 68 million people. Its customers include health plans, government agencies, unions and corporations.

Elsewhere

American Airlines looks to cut expenses by up to $3 billion

American Airlines, the world's biggest airline and the third-biggest carrier at Baltimore-Washington International Airport, might need to cut as much as $3 billion in annual operating expenses to return to profitability and compete with low-cost rivals, AMR Corp. Chief Executive Officer Don Carty said.

Travel demand through the end of the year is expected to remain weak, and Carty declined to say whether that means more firings or layoffs at the company. He said American will make more announcements on "structural changes" this year.

Reduced demand because of the terrorist attacks of Sept. 11 and a slower economy led to a combined second-quarter loss of $1.47 billion for the 10 biggest U.S. carriers, including $465 million at AMR.

Freightways OK'd for loan, will rehire some drivers

Consolidated Freightways Corp. received court approval for a $225 million loan and will rehire some drivers and other workers. The third-largest U.S. trucker filed for bankruptcy protection this week,

The loan from General Electric Capital Corp. includes $40 million in new financing and will allow the company to proceed with plans to liquidate the business, the company said. Consolidated, which had 89 workers at its Baltimore terminal, has had losses for seven quarters in a row.

The 73-year-old trucking company, based in Vancouver, Wash., will bring back as many drivers and terminal employees as it needs to handle shipments that were in progress Monday, when the company announced that it would shut down and immediately fire more than 80 percent of its 15,500 workers.

Caterpillar plans layoffs, other cuts at two plants

Caterpillar Inc. said it will lay off about 470 full-time workers and cut 290 temporary jobs at two Illinois plants that make heavy-duty truck engines and parts, as federal emissions rules reduce demand.

Caterpillar and rivals such as DaimlerChrysler AG's Detroit Diesel unit are laying off workers as heavy-truck demand declines because of tougher U.S. truck-engine pollution rules that are to take effect Oct. 1. Orders are falling because trucking companies stocked up with vehicles with engines that meet current rules.

Genentech wins battle over cancer drug

Genentech Inc. won't have to pay Chiron Corp. anything from its $1 billion in sales of Herceptin after a federal jury threw out a Chiron patent relating to the treatment for breast cancer.

Chiron claimed that Genentech's Herceptin was developed in part by patented technology created by Cetus Corp., later bought by Chiron. U.S. District Judge William Shubb ruled that Herceptin infringed on the patent, and jurors were asked to determine its validity.

Emeryville, Calif.-based Chiron was seeking up to $300 million in royalties on the more than $1 billion in Herceptin sales since the drug was introduced in 1998.

This column was compiled from reports by Sun staff writers, the Associated Press, Bloomberg News and the New York Times.